Mortgage struggles

[PJ87]

You'd be surprised in Worcester... I reckon you get a bigger garden, slightly bigger rooms and maybe an extra bedroom for 750k but not a lot more.

But that's the point bigger rooms and a bigger garden

My gardens tiny and mines worth 550 I reckon

Similar house to that has the loft but I think that's perfect house, like well presented .. and solid wall insulation

 

[Neilds]

House prices are so high, particularly in the South East. It doesn't cost £ ½ million to build a house. This is excess demand over supply and reflects a shortage of land for building rather than construction costs.

I have no idea why supply is restricted - planning rules, greenbelt?

I do know it is made worse by stamp duty. There is no real reason for me to remain in commuter Surrey but I do object to paying £30k in stamp duty to move. The opposite would be economically sensible A subsidy to old people like me to move would free up lots of housing in high demand areas.

If everywhere is like my area then it is local opposition that is stopping houses being built. They love a moan round here whenever a new estate is proposed

 

[road2ruin]

If everywhere is like my area then it is local opposition that is stopping houses being built. They love a moan round here whenever a new estate is proposed

We have a lot of that in my area (darkest Surrey) but a lot of the opposition isn't so much against the new houses being built it is the lack of infrastructure that comes with it. Our local area has little in the way of school spaces, it's impossible to get a doctors appointment and the roads are very busy at rush hour. None of the new estates include additional schools, doctors and usually the access to the estate is going to make a relatively quiet area a complete nightmare. Another favourite is to build flats on a bit of land that was previously a house but not offer parking spaces for those residents so anyone with a car will need to park on street which just makes the roads more of a mission.

As an example, a large secondary school nearby is in desperate need of investment, it's practically falling apart so a deal was done with a property developer to sell off their land and as part of it the developer would build a brand new school with additional space to accommodate more children, seemed like a win win. Now the developers have come back and said that due to the cost of materials they need to add an additional 20% to the total number of houses otherwise they cannot do the deal. They've already dropped the doctors surgery that was part of their initial plans and so the local area is completely against it which I totally get. It's a shame as the school needs the improvement but doesn't look as though funds are going to come from anywhere else.

 

[Voyager EMH]

House prices are so high, particularly in the South East. It doesn't cost £ ½ million to build a house. This is excess demand over supply and reflects a shortage of land for building rather than construction costs.

I have no idea why supply is restricted - planning rules, greenbelt?

I do know it is made worse by stamp duty. There is no real reason for me to remain in commuter Surrey but I do object to paying £30k in stamp duty to move. The opposite would be economically sensible A subsidy to old people like me to move would free up lots of housing in high demand areas.

Houses get built when there is a huge profit to be made by doing so.
That is not now.
Cost of building is very high and cost of buying (with a mortgage) is prohibitive. So not enough profit in building. Just sit on the land and wait.
Cost of building is usually met by borrowing and that is being restricted by higher interest rates.

Its all about money. Big money. Protecting the big money.

 

[IanM]

George Orwell

George Orwell

If you think you are smarter than the previous generation...50 years ago the owners manual of a car showed you how to adjust the valves. Today it warns you not to drink the contents of the battery.

 

[Hobbit]

It’s laughable that some are saying the older generation had it easier/harder with the interest rates 40+years ago when it hit 16%. Every generation chooses the deal they can afford, and every generation feels the pain when the payments rise. Getting the deposit together was easier but we still went for the biggest mortgage we could afford, which equated to a nicer house. And the increase from 14% to 16% hurt… no holidays abroad for a few years.

 

[PJ87]

It’s laughable that some are saying the older generation had it easier/harder with the interest rates 40+years ago when it hit 16%. Every generation chooses the deal they can afford, and every generation feels the pain when the payments rise. Getting the deposit together was easier but we still went for the biggest mortgage we could afford, which equated to a nicer house. And the increase from 14% to 16% hurt… no holidays abroad for a few years.

The point the twitter thread raises rightly points that interest rates at 3% now is equal to say (top of head I haven't got it open) 10% back in the day

So people go oh it's not bad we had it worse

When you look into the figures it's shocking compared

 

[jim8flog]

I was going to post how it was for us when we married and bought our first house 18 months later but I can see this turning in to a Monty Python thread.

 

[cliveb]

This is the thread I was referencing.....

https://twitter.com/x/status/1572975530722627584

"So for instance, take 1980. Back then, official BoE interest rates were on average 14.2%.But because people were much less heavily indebted, because their incomes were much higher vs their repayments, that was, in affordability terms, EQUIVALENT to 3% in today’s interest rates."

Well, I don't know how indebted people tend to be today, but if what Mr Conway says is true, then things must be absolutely catastrophic for them.

I remember that back in the 1980s, many double-income families were spending 75% of their income on mortgage repayments.
It's difficult to imagine a scenario that could be much worse.
So I am skeptical that Mr Conway is correct.

 

[SwingsitlikeHogan]

Why is there always a need for older generations to say they has it as bad?

No, you didn’t.

We don’t all say such things…in fact this oldie considers the lot and prospects of the current generation of 20-30 somethings to be pretty awful and very difficult compared with what I was able to do mid 80s to mid 90s when I was in that age bracket - had a decent and pretty well, though not of city banker level, paid job

What I and my wife can do is be benevolent and non-judgemental benefactors as best we can to our children, when, as they will and have done, need our support.

 

[PJ87]

Well, I don't know how indebted people tend to be today, but if what Mr Conway says is true, then things must be absolutely catastrophic for them.

I remember that back in the 1980s, many double-income families were spending 75% of their income on mortgage repayments.
It's difficult to imagine a scenario that could be much worse.
So I am skeptical that Mr Conway is correct.

Average UK house price is 285k in march 2023

Base that on 10% deposit needs roughly 250k mortgage

25 year term at 6% current is £1611 pcm

Average wage 31k ATM so two average wages 62k

Bring in 50k a year after tax


20k roughly on mortgage in that situation, however very rare figures I'd say. The wages where houses are cheaper won't be reflective of that

My total monthly out goings not including food or driving is £2070

If my mortgage jumped it would add another £600 on top of that

Once you add your food into that (£1000 for us) then that's a fair chunk of money

Considering in this example two "average' people would bring in 4k a month that's all there money taken up in bills before you get onto childcare

Which ATM people are paying basically a second mortgage for per month

 

[SwingsitlikeHogan]

haha! exactly. My mum and dad were all "ooh I remember when interest rates went from 8 to 13%! We know how you feel"...you don't though, do you? because the house prices weren't 5-6x the average salary and could be afforded on one wage. The two aren't compatible. Sure, they would have had higher payments, but the jump would not have been as extreme as it's been for most now.

..and for most mortgage holders the jump in payments could be accommodated by their (previously) disposable income.

 

[chrisd]

Well, I don't know how indebted people tend to be today, but if what Mr Conway says is true, then things must be absolutely catastrophic for them.

I remember that back in the 1980s, many double-income families were spending 75% of their income on mortgage repayments.
It's difficult to imagine a scenario that could be much worse.
So I am skeptical that Mr Conway is correct.

We were certainly paying 75% of our income on mortgage payments when it peaked at 15%

 

[road2ruin]

Well, I don't know how indebted people tend to be today, but if what Mr Conway says is true, then things must be absolutely catastrophic for them.

I remember that back in the 1980s, many double-income families were spending 75% of their income on mortgage repayments.
It's difficult to imagine a scenario that could be much worse.
So I am skeptical that Mr Conway is correct.

All the figures are there, I’m not sure why there is much to doubt when you factor in people paying £300+ for gas/electricity, huge amounts of council tax plus the cost of food etc.

The other thing that those who had property in the 80’s is that whilst I don’t doubt it was a struggle back then and some did sadly lose their houses however for those that clung on they’ve done very well since with regards house prices. I include my folks in that, I’ve seen what they’ve sold various houses for and anyone buying today is never going to make anywhere close to that in property.

 

[PJ87]

Of course back in the day people did go through the mill aswell however ask yourself these questions

Were you able to pay for your kids weddings?

Did you benefit from free university?.

Did anyone help out their kids with deposits for their houses to get them on the ladder?

Were you in position to retire at say under 60 on a decent enough pension?

Now speak to your kids or grandkids

Ask about their pensions

Ask about if they can afford to even have savings let alone afford to help kids out with things like weddings?

Think of the lowish prices houses cost to what they are worth now and people are expected to pay that to get on the ladder now

My friend was looking at 130k for 30% share of a house. A 3 bed average semi in bath.

The world has changed a lot and it's not for the better.

I'll add one. Were you able to afford a property on 1 wage so the kids could be looked after? Today childcare is £1000 pcm per child on average

 

[Mudball]

The traditional economic theory of tightening the money supply in order to rein in Inflation is as old as the hills and has worked for many years and for many countries.. but the UK situation is getting too difficult to control. I found it strange when Bailey said something like... people should not ask for a pay hike as it increase inflation. It is a vicious cycle.... if you increase pay, people want to consume more, so you have lot of money chasing too few goods, which puts price up, which is inflation, and people want more money to pay for the goods etc.

One way is to break the consumption cycle ie. people not wanting a bigger house, car, eating out all week. but unfortunately, we are in the situation, where prices of basic goods, transport, energy has gone up. People cannot skip heating and eating, so they need more money. Hence the strikes.

Another way is towards Govt stepping in and doing a price control (supply side) or rationing (demand side). Unlike some of the continental cousins, we chosen not to go down that path of capping prices and let us be market driven. We did have an energy cap which seems to have capped energy price in summer when we dont use so much heating and is looking to increase it in Winter when we actually need it.

There is no single solution, but the power to be seemed to be convinced that increasing interest rates is the only bullet left. Unfortunately, we just have to grin and bear it.. We are told that inflation will be halved by end of the year, so lets pray it works

PS: My mortgage went from 1.29% to 3.35%... thats double the outgoing...

 

[PJ87]

The traditional economic theory of tightening the money supply in order to rein in Inflation is as old as the hills and has worked for many years and for many countries.. but the UK situation is getting too difficult to control. I found it strange when Bailey said something like... people should not ask for a pay hike as it increase inflation. It is a vicious cycle.... if you increase pay, people want to consume more, so you have lot of money chasing too few goods, which puts price up, which is inflation, and people want more money to pay for the goods etc.

One way is to break the consumption cycle ie. people not wanting a bigger house, car, eating out all week. but unfortunately, we are in the situation, where prices of basic goods, transport, energy has gone up. People cannot skip heating and eating, so they need more money. Hence the strikes.

Another way is towards Govt stepping in and doing a price control (supply side) or rationing (demand side). Unlike some of the continental cousins, we chosen not to go down that path of capping prices and let us be market driven. We did have an energy cap which seems to have capped energy price in summer when we dont use so much heating and is looking to increase it in Winter when we actually need it.

There is no single solution, but the power to be seemed to be convinced that increasing interest rates is the only bullet left. Unfortunately, we just have to grin and bear it.. We are told that inflation will be halved by end of the year, so lets pray it works

PS: My mortgage went from 1.29% to 3.35%... thats double the outgoing...

Inflation may be halved but that's not the end of the story , high prices will stay for years

We won't see a return of low energy for least a decade and food prices prob 5 years before they drop

Would take negative inflation to go back to how it was and thats a dirty word

As I said on the birthday golf thread £50 has become the new £30

We have all become poorer

 

[PhilTheFragger]

As others have eluded to, this is not a traditional economic crisis, it has been artificially created by the increase in demand for oil, gas & leccy after Covid and by the war in Ukraine which has had an affect on the export of grain from Ukraine and oil/ gas from Russia. restrict the supply = increased prices for those who can pay it. If the energy markets / producers had agreed to fix the price early, we wouldnt be so deep in the clag.

Interest rates are a very blunt tool with which to fight inflation, There is a time lag of between 2 - 3 months for any interest rate rise to have an affect on the rate of inflation and I would like to see a halt to interest rate rises , as the rises themselves are now fuelling inflation.

Normally we would see high inflation, high interest rates, a recession and an increase in unemployment, we are not seeing the last 2, therefore it isnt a "normal economic crisis" and "normal" ways of dealing with it may not be the best way.

 

[PJ87]

As others have eluded to, this is not a traditional economic crisis, it has been artificially created by the increase in demand for oil, gas & leccy after Covid and by the war in Ukraine which has had an affect on the export of grain from Ukraine and oil/ gas from Russia. restrict the supply = increased prices for those who can pay it. If the energy markets / producers had agreed to fix the price early, we wouldnt be so deep in the clag.

Interest rates are a very blunt tool with which to fight inflation, There is a time lag of between 2 - 3 months for any interest rate rise to have an affect on the rate of inflation and I would like to see a halt to interest rate rises , as the rises themselves are now fuelling inflation.

Normally we would see high inflation, high interest rates, a recession and an increase in unemployment, we are not seeing the last 2, therefore it isnt a "normal economic crisis" and "normal" ways of dealing with it may not be the best way.

It's nice to read a few in agreement to what I've tried to say. This is such an usual circumstance we find ourself in now.

Even those setting the rates arent sure they have done the right thing

 

[Tashyboy]

Anecdotal Fallacy — Critical Thinking | Intelligent Speculation

An informal fallacy where personal experience or a singular example is used instead of compelling evidence. People often gravitate towards using their own experiences or those of people around them as evidence in arguments. It's natural to do so as citing scientific evidence to craft a good argumen

www.intelligentspeculation.com

Am struggling to see the relevance of the link you posted. Especially when it says one’s persons experience is used instead of compelling evidence. What compelling evidence? YOU stated the old uns turn up and say it was worse in our day. No they didn’t they responded to claims ( not compelling evidence) that other folk have never had it as bad in the olden days as it is now.
Me I made an example of how me and Missis T kept our heads above water in response to your comments. I never said it was worse in our days. So again is the anecdotal fallacy for me or you. Am not sure..
So do I need to be convinced it’s tough today for mortgage owners. Well seeing as I actually started the topic, I would suggest not, seeing as I don’t have a mortgage and suggested that maybe a tax increase would be better. Again not. Today is Missis Ts birthday and we have had the grandsproggs all day bar skool. Again when I was a parent I cannot remember my parents having the kids during the days. Maybe it’s tougher being a grandparent now than in the olden days. That could also be an anecdotal fallacy though